We're expecting a number of PHEV entrants to show up at the Detroit
Auto Show next week. Here's the first, from China.
We also include a front-page story by the same Wall Street Journal
automotive reporter, Norihiko Shoruzu, surveying the battery world.
The story mentions four top battery contenders, A123, Altair,EnerDel
and Valence; it provides some basic background on the first two but
trails off before looking at the latst two.
China's BYD Auto Plans To Sell Hybrids in U.S.
By NORIHIKO SHIROUZUJanuary 11, 2008 8:52 a.m.
Write to Norihiko Shirouzu at norihiko.shirouzu@...
DETROIT -- BYD Auto Co., a Chinese upstart auto maker with only five
years of experience in auto manufacturing, wants to start selling
cars in the U.S. auto market in a couple of years, but it plans to do
so not just with gasoline-powered vehicles but more environmentally
friendly electric vehicles, a senior company manager told The Wall
Street Journal here this week.
Paul Lin, auto export manager of BYD Auto, admitted the company
anticipates a rough time in making inroads into the U.S. market.
While the company already sells cars in China and other developing
countries, it recognizes meeting stringent U.S. safety and emissions
regulations would be a big challenge for the upstart. What's more,
the company has just begun efforts to establish relationships with
American vehicle distributors.
"BYD is growing fast, and everybody's talking about Chinese car
companies' ambitions for the U.S. market. But actually a lot of
Chinese auto companies still need more time," Mr. Lin said in an
interview. "It took Toyota 60 years to get where they are today."
Still, the executive of the Shenzhen-based auto maker -- one of
several companies consulting firm JD Power and Associates has
identified as "Chinese auto makers to watch" -- said his company
wants to launch in the U.S., among other vehicles, a new breed of a
gasoline-electric hybrid that can be plugged into a home wall outlet
and run 100 kilometers (about 61 miles) on electricity when fully charged.
Mr. Lin said the plug-in hybrid, based on its gasoline-fueled BYD F6
sedan, will likely hit U.S. dealer showrooms until the end of 2009 or
the beginning of 2010. BYD Auto is expected to display the plug-in
hybrid at the North American International Auto Show that opens to
the public on Jan. 19.
BYD Auto, one of several China-based auto makers displaying cars in
Detroit this month, is taking to advantage of the Detroit auto show
to establish contact with U.S. car distributors. As what Mr. Lin
calls a proof of BYD Auto's commitment, he and his small team of
executives have rented an apartment in Dearborn, a suburb of Detroit,
and plan to stay here through the end of January to follow up with any leads.
"Attending the Detroit show this time is to develop contacts and get
our name known by potential distributors," Mr. Lin said. "We want
people in America to know BYD is not a noodle company."
He said the launch of the plug-in hybrid would be quickly followed by
other models including other plug-in hybrids, all-electric cars, as
well as conventional gasoline-fueled vehicles. Mr. Lin didn't
elaborate on what kind of time frame BYD Auto had in mind.
Mr. Lin said the plug-in hybrid is almost ready for sale in China,
but BYD Auto will need at least two more years to make sure it meets
America's tough safety and other regulations.
In China, Mr. Lin said BYD Auto plans to launch the plug-in hybrid
this summer -- "during the Beijing Olympics" -- and is likely to sell
it for 200,000 yuan [US$27,000]. The company likely has sold about
100,000 cars in China in 2007, he said.
The car would likely to sell for a similar retail price tag in the
U.S., he said.
The BYD plug-in hybrid, to be called the BYD F6 DM, is similar in
design to General Motors Corp.'s Chevy Volt concept car which GM is
aiming to launch by 2010. Both cars are propelled by electric motors
using electricity stored on batteries and generated by a small
gasoline engine on the car when the car run out of electricity when
it isn't plugged in.
BYD Auto, which began producing and selling cars in 2003, is
displaying the plug-in hybrid car and four gasoline-fueled vehicles
at the Detroit auto show.
The company's interest in electrified vehicles stems from its
history. The company is a unit of BYD Group that has emerged as a
major global supplier of lithium-ion batteries and other electronics
components for cellphones such as those marketed by Finland's Nokia Corp.
Race to Make Electric Cars Stalled by Battery Problems
GM, Toyota Seek Ways To Snuff Out Fire Risk; Start-Ups See Opening
Page 1 Wall Street Journal Jan. 11, 2008 By NORIHIKO SHIROUZU
DETROIT -- When the car world gathers here Sunday for the annual
North American International Auto Show, the industry will be buzzing
about electric power. Auto makers from General Motors Corp. to Toyota
Motor Corp. will be displaying a new breed of cars that run mainly on
But there is one thing the car people won't be charged up about:
batteries. For all the hoopla, nobody yet has figured out how to make
a small enough battery that will hold a big enough charge for these
new cars -- and not be a risk to burst into flames.
The limits of electric-car technology are achingly clear in one of
the most-heralded cars on the drawing board: GM's Chevy Volt. GM
executives mention the prototype, which the Detroit auto maker aims
to put into production in three years, nearly every time they discuss
their vision for "gas free" cars. But GM still hasn't solved the
A handful of companies are racing to come up with a battery suitable
for this next generation of electric cars. The competition pits big
Asian battery makers against a gaggle of small start-ups, most of
them based in the U.S. Each is trying to come up with a viable power
source for long-range electric cars and for gasoline-electric hybrids
such as the Volt, which rely far more on electricity than do hybrids
currently on the market.
But the most promising technology, lithium-ion batteries like the
ones used in laptop computers and cellphones, has been plagued by
problems. Earlier this week, for example, the battery in a laptop
made by a South Korean firm burst into flames. U.S. transportation
authorities recently said air travelers will no longer be allowed to
pack loose lithium-ion batteries in checked luggage.
Car makers can't very well sell vehicles that might "ignite and burn
up grandma and two kids sitting on half a ton of batteries in the
car," says Tim Spitler, a battery-material researcher at Altair
Nanotechnologies, which is working to develop a car battery.
Japanese companies have long dominated the lithium-ion battery
market. But a slew of obscure American companies such as A123
Systems, EnerDel Inc., Valence Technology and Altair have gotten into
the game, hoping to leap-frog their Japanese competitors by solving
Rising oil prices, coupled with public concern over global warming,
have prompted auto makers to intensify efforts to build cars that run
on alternative fuels. The hope is that cars running on powerful
batteries could help reduce the total carbon dioxide pumped out by
passenger cars, which scientists say is a major contributor to global warming.
Toyota, GM and other auto makers have been experimenting with several
different systems for harnessing electric power: a new kind of hybrid
called plug-ins, which rely on small gasoline engines to occasionally
boost the batteries, and cars that run entirely on batteries. Both
systems require cars to be plugged in for recharging.
The popular Toyota Prius hybrid, which never needs to be plugged in,
relies partly on gasoline power almost as soon as it picks up speed,
and averages about 46 miles per gallon. GM says its plug-in Volt will
be designed to run on batteries alone for up to 40 miles -- the
length of a typical commute.
Plug-in hybrids and fully electric cars both require batteries that
can store lots of energy, recharge quickly and operate in all weather
without overheating or failing. Right now, no commercially available
battery technology fits the bill, including the batteries used in the
Prius, called nickel-metal-hydride cells.
Lithium-ion technology holds the most promise. Lithium-ion batteries,
unlike the disposable alkaline variety sold in drugstores, hold lots
of energy in a small cell, and can be charged again and again.
Japanese companies such as Sony Corp. and Sanyo Electric Co. took an
early lead in figuring out how to use the technology to make
batteries for consumer electronics.
Then reports began surfacing that laptop and cellphone batteries were
overheating and catching fire. The batteries tend to short-circuit
when damaged, or when a part designed to separate positive and
negative electrodes is scarred during manufacturing, among other
possibilities. In 2006, Sony decided to undertake a massive recall of
its batteries used in laptops sold by Dell Inc. Many other battery
and electronics makers followed suit. Sanyo recalled laptop and
cellphone batteries. Nokia Corp. offered to replace cellphone
batteries made by Matsushita Electric Industrial Co.
Toyota had planned to use lithium-ion batteries in a new version of
the Prius that would get 60 to 80 miles per gallon, according to
Toyota engineers. But the safety problems prompted Toyota to push
back the planned launch of the lithium-ion technology from later this
year to late 2010 or early 2011.
The problem presented an opportunity for U.S. battery makers to catch
up with the Japanese, who previously appeared to have the market
locked up. Whichever company solved the overheating problem would
have a shot at lucrative deals with auto makers such as GM. The
challenge was to figure out how to reduce the danger level of the
lithium-ion technology by altering the chemical makeup of the battery guts.
Early last year, GM invited 27 lithium-ion battery producers from
around the world to provide sample battery cells and performance data
in order to be considered for the Volt program.
"We just lined up every known high-tech manufacturer of lithium-ion
batteries," says GM Vice Chairman Bob Lutz. "We put the pluses and
the minuses and weighted them by energy content, production capacity,
reputation, cost, type of chemistry. The guys did the whole matrix
and assigned points and added up the points...that's how we got down
to relatively a few suppliers, maybe six or seven out of the whole
GM eventually selected two "development suppliers," consortiums of
companies whose technologies it will test for the Volt. One
consortium includes A123 Systems, a start-up led by a group of
scientists from the Massachusetts Institute of Technology. The other
group is led by a unit of South Korean chemical maker LG Chem Ltd.
A123 Systems aims to commercialize battery technology developed by
MIT professor Yet-Ming Chiang. Mr. Chiang set up the company in 2002
with Bart Riley, formerly an executive at American Superconductor
Corp., and entrepreneur Ric Fulop. After starting with a research
grant from the U.S. Department of Energy, A123 raised $132 million in
capital from investors including Sequoia Capital, a Menlo Park,
Calif., venture-capital firm, and General Electric Co.'s
commercial-finance unit. It hopes to go public as early as this year.
A123 has been working with iron-phosphate technology in an effort to
create a lithium-ion battery that's less likely to overheat. It
already supplies lithium-ion batteries to Black & Decker Corp. for
use in power tools. But winning the Volt deal would boost its
David Vieau, the company's chief executive, sees a limited window of
opportunity. "When the market is in such a big disruption as it is
now, that's the only time a company like ours has a chance to cut
into the business," he says. "There's really no existing supplier"
that can meet technological demands for a car like the Volt. "They
can't get it from Sanyo or Panasonic. They have to shop around, so
that opens up the door for an opportunity for someone like us. It's a
very unusual time. It's only going to last for a certain period of
time, probably five years."
The big Asian battery makers have enormous advantages, starting with
the big investments they've already made in the manufacturing
process. Mitsuru Homma, Sanyo's top battery executive, contends that
no matter how good a company is at laboratory research, it needs to
be good at manufacturing to produce a safe battery.
"It doesn't matter how far ahead you are in research and development"
because all lithium-ion batteries are prone to overheating, no matter
what chemistries you use, he contends. "Clever design can minimize
the chances for overheating. But if you don't have fool-proof
manufacturing know-how, you won't be able to guarantee 100% the
safety of a battery cell, no matter how safe it may be proven in the lab."
Altair Nanotechnologies, based in a warehouselike building near the
airport in Reno, Nev., is typical of the small companies chasing the
opportunity. It claims to have improved on lithium-ion battery
technology. Its challenge is to convince potential customers that its
technology is the answer and that the company is capable of
Chief Executive Officer Alan Gotcher says that Altair, which has been
listed on the Nasdaq Stock Market since 1997, has a "checkered past."
For years, he says, it operated as a "speculative company" that,
among other things, explored for oil and gas. Since 2004, he says, it
has focused on manufacturing high-tech materials for batteries,
pharmaceuticals, paint pigments and industrial chemicals. In the
first three quarters of 2007, it had a loss of $16.7 million. During
an employee meeting last fall, Mr. Gotcher stressed that all
employees need to contribute to slowing the company's cash burn to
"make sure the company will stay around."
Mr. Spitler, a 60-year-old engineer, is at the center of Altair's
battery efforts. A two-time college dropout who got his degree in
chemistry at age 29, he worked for years for Dupont Co., then for a
company that was sold in 1998 to Altair. At that company, he
researched ways to improve the quality of paint.
It turned out that his research on paint pigments was applicable to
the battery problem. His paint work and related experiments involved
shrinking particles of a material called lithium titanate. That
material, he contends, is useful in lithium-ion batteries. Other
scientists, he says, had recognized that lithium titanate could make
lithium-ion batteries more stable chemically, and thus less likely to
overheat and ignite. But using the material, those scientists
concluded, limited both the battery's power and its energy density --
its ability to store energy in a given volume of space.
Mr. Spitler contends that if the particles are shrunken small enough
-- to 40 millionths of a millimeter in diameter -- they'll work. At
Altair, he says, he came up with a cheap way to do that. The
equipment Altair uses to produce the particles and how it "mills" and
"bakes" them, Mr. Spitler says, "we never reveal it to anybody."
When Mr. Gotcher, a 57-year-old chemist, arrived at Altair in 2004 to
take over as chief executive, he found Mr. Spitler's technology
sitting on a shelf. He decided to steer Altair into the business of
making lithium-ion batteries. He raised capital through a stock
offering and brought in a dozen battery experts to help create
proprietary batteries and battery modules.
Altair's engineers say their batteries are fast-charging and
powerful, work at temperatures ranging from 167 degrees Fahrenheit to
58 degrees below zero, and are less likely to catch fire or explode.
Altair began selling them in 2006, but sales have been slow. The
company's executives say they are optimistic about getting orders
from a few electric-vehicle start-ups, such as Phoenix Motorcars Inc.
of Ontario, Calif., and Lightning Car Co. of the United Kingdom. But
in November, Altair disclosed that Phoenix would likely not make $16
million to $42 million in orders this year, which Altair had
projected. "Orders may fall below $16 million," Altair said in a
Securities and Exchange Commission filing.
One big problem is that Altair's batteries have a lower energy
density than competing designs. As a result, a hybrid or electric car
would need about twice the volume of Altair batteries as it would
batteries that that pack a bigger punch, such as the ones from A123
Systems. That makes Altair's products less suitable for small hybrids
like the Volt than for larger vehicles like SUVs and pickup trucks.
Mr. Gotcher remains hopeful. In November, Altair raised $40 million
through a stock sale to a Dubai trading company, and a Japanese
trading company is considering investing, people familiar with the matter say.
Last month, Japan's Toshiba Corp. announced it had developed a new
lithium-ion battery that offers "excellent safety" and would last
through 10 years of "constant, rapid charging." It uses technology
similar to Altair's.
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Felix Kramer fkramer@...
Founder California Cars Initiative
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